Finance Earnings Outlook Improves: S&P 500 Expected to See Growth
Q2 earnings for the S&P 500 index are expected to increase by +4.7% from the same period last year with +4.0% higher revenues. Tech and Finance sectors have seen negative revisions, impacting overall growth. The ‘Magnificent 7’ companies are projected to have +11.4% earnings growth in Q2. Bank earnings outlook is improving due to Fed stress test results, with JPMorgan, Wells Fargo, and Citigroup set to report. Earnings growth for these banks remains subdued, but estimates for the second half of the year are improving.
JPMorgan’s Q2 earnings are expected to decrease by -5.4%, while Citigroup and Wells Fargo are expected to see -3.8% and -7% declines, respectively. The Zacks Investment Brokers & Managers industry is forecasted to have -2.8% lower earnings. However, these stocks have been performing well in the market, reflecting expectations of improved capital returns and earnings growth.
The Tech sector is projected to have +12.1% earnings growth in Q2, though estimates have been adjusted lower since the start of the quarter. The sector’s full-year 2025 estimates have stabilized, indicating a positive trend. Tech stocks make up a significant portion of S&P 500 earnings. Earnings growth expectations have been impacted by tariff uncertainty, leading to downward revisions in Q2 estimates for various sectors, including Transportation, Autos, Energy, Construction, and Basic Materials. Only Aerospace, Utilities, and Consumer Discretionary sectors have seen positive revisions.
The market has shown a strong rebound from post-tariff lows, but the impact of tariffs on earnings remains uncertain. Analysts are cautious about the optimistic market view. The Zacks Investment Research report highlights five stocks with potential for significant growth. The report suggests that these stocks are currently undervalued, presenting an opportunity for investors. Wells Fargo, JPMorgan Chase, and Citigroup are among the companies mentioned in the report.
Read more at Nasdaq: Finance Earnings Outlook Improves: A Closer Look